With Rate Cut, Shaktikanta Das Passes "Litmus Test", Says RSS Leader

The RSS has been critical in the past of the RBI's hawkish monetary stance.

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With Rate Cut, Shaktikanta Das Passes 'Litmus Test', Says RSS Leader

Shaktikanta Das announced an unexpected cut in interest rates at the RBI monetary policy review.


New Delhi: 

India's new Reserve Bank of India governor Shaktikanta Das has "passed the litmus test" by cutting the policy rate on Thursday, a leader of the economic wing of the Rashtriya Swayamsevak Sangh, the ideological mentor of the ruling BJP, told news agency Reuters.

The rate cut will politically benefit Prime Minister Narendra Modi's government as it would boost economic growth and lending to small businesses, Ashwani Mahajan, co-convenor of the Swadeshi Jagran Manch, said.

The central bank unexpectedly lowered interest rates and, as anticipated, shifted its stance to "neutral" to boost a slowing economy after a sharp slide in the inflation rate.

The government had named Mr Das, a seasoned financial bureaucrat, as the new governor of the RBI late last year after Urjit Patel resigned following a months-long tussle between the government and the central bank over its autonomy.

Soon after his appointment Mr Das had said he would consult more closely with the government on policy issues. Marking a clear break with the policy approach of his predecessor, he also struck a dovish tone on prospects for inflation and the economy.

The RSS, which has links to organisations that represent interests of small businesses and traders, had criticised Dr Patel, saying the RBI governor should work in sync with the nation's government to support economic growth or resign.

The RSS has also been critical in the past of the central bank's hawkish monetary stance, and has criticised the influence of foreign-trained economists including former RBI governor Raghuram Rajan and former chief economic adviser at the finance ministry, Arvind Subramanian.

(With inputs from Reuters)



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